1. Unlocking Financing and Investments for Clean and Renewable Energy Access in Uganda: A Case of the Albertine Region, July 2018

For more information, contact:
Executive Director, Environmental Alert
Tel: +256 414-510547 or 510215
Email: ed@envalert.org
Website: www.envalert.org
Plot 475/523 Sonko Lane
Kabalagala Off Ggaba Road
This report is an output from several CSOs engagements coordinated by Environmental Alert
with financial support from Norad within the framework of “Increasing access to sustainable
and renewable energy alternatives in the AlbertineGraben” that is implemented by
WWF-Uganda Country Office.
Unlocking Financing and Investments for
Clean and Renewable Energy Access in
Uganda:
A Case of the Albertine Region.
1988-2018
July, 2018.

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Acknowledgements
Environmental Alert (see Box 7) acknowledges the financial support from WWF-UCO as the major funder to the
research and production of this report. We also appreciate Mr. Ibrahim Mutebi – the Renewable Energy Manager,
WWF-UCO and Ms. Jacqueline Mbabazi, Renewable Energy Officer, WWF-UCO for the technical inputs in this
report.
We would like to thank all respondents at national and local government levels in Arua, Buliisa, Hoima, Kagadi,
Koboko, Kyenjojo, Masindi, Moyo, and Nebbi for accepting to participate in the study (interviews, focus group
discussions and validation workshop) despite their busy schedules. In a special way, we would like to thank Rural
Initiative for Community Empowerment (RICE) in West Nile, Kibale District Civil Society Organisations Network
(KCSON) in Kagadi and KIIMA Foods in Kasese for assisting the research team in mobilising stakeholders and
contributing to the study.
In addition, the efforts and inputs by the technical team at Environmental Alert, namely: Dr. Joshua Zake (PhD),
Ms. Rachel Nalule, Mr. James Thembo is commended and appreciated. The efforts and support by the Mr. Daniel
Lukwago and Robert Mugambwa of Nonner Consults, and the CSOs and Networks in the production of this report
is appreciated. Further, we also thank all the participants (Annex 6.) that were involved in the process of validation
of this report.

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Table of Contents
List of Figures ----------------------------------------------------------------------------------------------------- iii
List of Tables ------------------------------------------------------------------------------------------------------ iii
Executive Summary ------------------------------------------------------------------------------------------------ v
Section 1: Introduction-------------------------------------------------------------------------------------------- 1
1.1 Background -------------------------------------------------------------------------------------------------------------1
1.2 Rationale of the Study ------------------------------------------------------------------------------------------------1
1.3 Objectives of the Study-----------------------------------------------------------------------------------------------2
1.4 Methodology------------------------------------------------------------------------------------------------------------2
1.5 Scope and Coverage---------------------------------------------------------------------------------------------------5
1.6 Limitations of the Study----------------------------------------------------------------------------------------------5
Section 2: Financing and Investment towards Clean and Renewable Energy Access in Uganda. 6
2.1 Current finance flows-------------------------------------------------------------------------------------------------6
2.2 Potential for providing energy access to Ugandans. ------------------------------------------------------------7
2.2.1 Mechanisms being used to enhance investment in renewable and clean energy.--------------------9
2.3 Financing needs for scaling-up clean and renewable energy access in Uganda. -------------------------13
Section 3: Opportunities for Investment in Clean and Renewable Energy Access in Uganda-----16
3.1 Supportive policy and regulatory framework-------------------------------------------------------------------16
3.2 Supportive Institutional framework------------------------------------------------------------------------------17
3.3 Financially viable electricity sector -------------------------------------------------------------------------------19
3.4 Funding opportunities ---------------------------------------------------------------------------------------------- 19
3.5 Carbon financing ---------------------------------------------------------------------------------------------------- 22
3.6 Potential of oil and gas revenues ---------------------------------------------------------------------------------22
3.7 Investment in off-grid------------------------------------------------------------------------------------------------23
Section 4: Constraints Limiting Financing and Investment for Clean and Renewable Energy
in Uganda ------------------------------------------------------------------------------------------------------
4.1 International Level -------------------------------------------------------------------------------------------------- 24
4.2 National level------------------------------------------------------------------------------------------------------- 25
4.3 Local Level------------------------------------------------------------------------------------------------------------ 28
Section 5: Conclusions and Recommendations-------------------------------------------------------------30
5.1 Conclusion ------------------------------------------------------------------------------------------------------------ 30
5.2 Recommendations------------------------------------------------------------------------------------------------- 30
5.3 Recommendations for Environmental Alert and partners --------------------------------------------------33
References ---------------------------------------------------------------------------------------------------------33
ANNEXES ---------------------------------------------------------------------------------------------------------I
Annex 1: List of Respondents--------------------------------------------------------------------------------------I
Annex 2: Small Hydropower Committed and Candidate Generation-----------------------------------------III
Annex 3: Potential Domestic renewable energy funding------------------------------------------------------VII
Annex 4: Potential International renewable energy funding ---------------------------------------------------IX
Annex 5: Data Collections tools ---------------------------------------------------------------------------------XI
Annex 6: Participants list ---------------------------------------------------------------------------------------XIV
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List of Figures
FIGURE 1: FGD MEETING WITH NGOS AND CBO REPRESENTATIVES IN MASINDI. SOURCE: ENVIRONMENTAL
ALERT ---------------------------------------------------------------------------------------------------------------------3
FIGURE 2: THE LEAD CONSULTANT, MR. DANIEL LUKWAGO PRESENTING THE DRAFT REPORT DURING THE
VALIDATION MEETING HELD ON 17TH MAY, 2018. . SOURCE: ENVIRONMENTAL ALERT -------------4
FIGURE 3: MR. WILSON WAFULA; COMMISSIONER, RENEWABLE ENERGY MEMD, GIVING HIS REMARKS
DURING THE VALIDATION--------------------------------------------------------------------------------------------4
FIGURE 4: FINANCIAL FLOWS IN THE ENERGY SECTOR IN UGANDA (US $ MILLION) -----------------------6
FIGURE 5: INTRA-SECTORAL BUDGET ALLOCATIONS IN THE ENERGY SECTOR -------------------------------7
List of Tables
TABLE 1: RENEWABLE ENERGY POTENTIAL ---------------------------------------------------------------------------7
TABLE 3: FINANCING REQUIREMENTS OF THE RURAL ELECTRIFICATION STRATEGY AND PLAN -------14
TABLE 4: FINANCING REQUIREMENTS FOR THE SCALING-UP RENEWABLE ENERGY PROGRAMME INVESTMENT
PLAN--------------------------------------------------------------------------------------------------------------------- 14
TABLE 5: EXAMPLE OF FINANCE NEEDS AND INSTRUMENTS BY ACTOR ---------------------------------------14
TABLE 6: PUBLIC INSTITUTIONS IN UGANDA’S ENERGY SECTOR -----------------------------------------------17
TABLE 7: DOMESTIC FUNDING OPPORTUNITIES FOR RENEWABLE ENERGY ---------------------------------19
TABLE 8: INTERNATIONAL FUNDING OPPORTUNITIES FOR RENEWABLE ENERGY -------------------------20
List of the Abbreviations
ADC Austrian Development Cooperation
AfDB African Development Bank
BADEA Arab Bank for Economic
Development in Africa
CAO Chief Administrative Officer
CBOs Community Based Organisations
CECAT College of Engineering, Design, Art
and Technology (CEDAT)
CEPA Clean Energy Partnership Africa
CSBAG Civil Society Budget Advocacy
Group
CSOs Civil Society Organisations
DANIDA Danish International Development
Cooperation
DFID Department for International
Development
DLG District Local Government
DPs Development Partners
EA Environmental Alert
EAETDN East African Energy Technology
Development Network-Uganda
EIB European Investment Bank
ENR Environment and Natural
Resources
ERA Electricity Regulatory Authority
ERT Energy for Rural Transformation
EU European Union
FDI Foreign Direct Investment
FGDs Focus Group Discussions
FIT Feed-in-Tariff
GEF Global Environment Facility
GETFiT Global Energy Transfer Feed in
Tariff
GIZ German Agency for International
Cooperation
GoU Government of Uganda
IAEA International Atomic Energy
Agency
IBD Islamic Development Bank
IRDI Integrated Rural Initiatives
JICA Japan International Cooperation
Agency
KCSON Kibaale District Civil Society
Organizations Network
KIIs Key Informant Interviews
MDA Ministries, Departments and
Agencies
MEMD Ministry of Energy and Mineral
Development
MoFPED Ministry of Finance, Planning and
Economic Development
MWE Ministry of Water and Environment
NGO Non-Governmental Organisation
NORAD Norwegian Agency for
Development Cooperation
NPA National Planning Authority
ODA Official Development Assistance
OECD Organization for Economic Co-
operation and Development

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OFID OPEC Fund for International
Development
OOF Other Official Flows
PFIs Participating Financial Institutions
PPP Public Private Partnership
PPDA Public Procurement and Disposal
of Assets Authority
REA Rural Electrification Agency
REFIT Renewable Energy Feed-in-Tariff
RICE-WN Rural Initiative for Community
Empowerment in West Nile
SACCO Savings and Credit Cooperative
Organisation
SFD Saudi Fund for Development
SHS Solar Home Systems
SIDA Swedish International Development
Cooperation Agency
UDB Uganda Development Bank
UECCC Uganda Energy Credit
Capitalisation Company
UEDCL Uganda Electricity Distribution
Company Ltd
UEGCL Uganda Electricity Generation
Company Limited
UETCL Uganda Electricity Transmission
Company Ltd
URA Uganda Revenues Authority
UIA Uganda Investment Authority
UNACC Uganda National Alliance on Clean
Cooking
UNBS Uganda National Bureau of
Standards
UNCDF United Nations Development Fund
UNDP United Nations Development
Program
UNIDO United Nations Industrial
Development Organisation
UNREEA Uganda National Renewable Energy
and Energy Efficiency Alliance
UREA Uganda Renewable Energy
Association
USAID United States Agency for
International Development
USTDA United States Trade and
Development Agency
VSLA Village Savings and Loan
Association
WENRECO West Nile Rural Electrification
Company
WWF-UCO World Wide Fund-Uganda Country
Office

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Executive Summary
Renewable energy is the most prevalent in electricity generation, with about 80 percent of Uganda’s electricity
coming from mainly hydropower. However, most households in Uganda don’t have access to electricity. According
to MEMD, less than 20.6% of the rural and 55% of the urban population have electricity services. Thus, majority
depend on biomass energy, especially wood fuels using unclean and inefficient methods. Dependence on biomass
energy is increasing pressure on natural resources, especially forests. Uganda has been losing on average 122,000
ha/year of forest every year from 1990-2015. Although Gov’t, DPs & CSOs are promoting access to renewable and
clean energy technologies, such interventions are still insignificant, to reduce the consumption of biomass energy.
The study investigated the opportunities and challenges for unlocking financing and investments for clean and
renewable energy access in Uganda. The study employed both qualitative and quantitative approaches – mainly
making use of document reviews, key informant interviews (KIIs) and Focus Group Discussions (FGDs). It
reviewed secondary data and analytical studies from various sources, including international databases, government
documents on clean and renewable energy financial mechanisms. Key informant interviews were conducted with
44 people (6 females and 38 males) at national & local levels (in Albertine region). Focus Group Discussions were
held with 44 people from 18 districts in the Albertine region.
Key Findings
Current finance flows
Financing and investment towards renewable energy (RE) has been increasing over the last decade, when the sector
was liberalized leading to increased investment by the private sector. Based on the available data from the
Government of Uganda (GoU), and OECD, total financing towards RE sector is estimated at USD 3.1 billion.
Over 70% (USD 2.3 billion) is by the private sector and 20 percent (USD 629 million) is by GoU budget allocations.
A further analysis of the GoU budget allocations shows that Large Hydro Power Infrastructure projects1 take a
lion’s share of the sector funding.
There is potential for providing energy access to Ugandans through solar Photovoltaic (PV), biomass /bagasse
cogeneration, waste to energy, geothermal, and wind, however, most of investments have been made in hydro power
generation and on-grid distribution than other sources of renewable energy.
Mechanisms being used to enhance investment in renewable and clean energy
Numerous mechanisms are being used to enhance investment in renewable and clean energy, which include among
others: i) Global Energy Transfer Feed in Tariff (GETFiT) programme aimed at realizing about 20 energy
generation projects, ii) Energy Fund which was spent mainly on Karuma and Isimba hydropower stations, iii) Rural
Electrification Fund (REF) which promotes equitable coverage of rural electrification in Uganda, iv) Subsidies and
incentives such as The Renewable Energy Feed in Tariff (REFIT), v) Uganda Energy Credit Capitalisation Company
(UECCC) which facilitates investments in RE sector, with a particular focus to enabling private sector participation
through provision of Credit Support Instruments (CSIs), vi) Provision of credit for renewable energy technologies
(RETs) by Financial institutions, companies and NGOs; and vii) Quality control and certification by Uganda
National Bureau of Standards(UNBS).
Financing needs for scaling-up clean and renewable energy access in Uganda
The evidence on how much money is needed for scaling-up clean and renewable energy access in Uganda, is quite
limited. The absence of updated energy sector investment plan makes it hard to estimate the amount of financing
and investment in clean and renewable energy. The estimates provided in the study are based on the Rural
Electrification Strategy and Plan (2013-2022); and the Scaling-Up Renewable Energy Programme Investment Plan,
which estimate that over USD 950 million and USD 455.1 million is needed by 2030, respectively. However, these
estimates underestimate the broad financing in the RE sector since they only cover rural areas and public sector
funding. However, both strategies and plans show that there is need for significant scaling-up in investment from
current levels, if Uganda is to achieve its electrification targets.
1 Isimba (183MW), Karuma (600 MW), Ayago (840 MW), Muzizi (44.7MW), Nyagak III (504 MW), Agago-Achwa (83 MW),
Oriang (392 MW), and Kiba (600 MW).

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Opportunities for Investment in Clean and Renewable Energy Access in Uganda
Some of the opportunities include among others: i) Supportive policy and regulatory framework such as the Vision
2040, National Development Plans (NDP) II, International commitments (SDG –Goal 7) & Sustainable Energy for
All (SE4ALL) Action Agenda), the Electricity Act, 1999, Energy Policy 2002; ii) Supportive Institutional framework
such as Public Institutions (MEMD, ERA, REA, UECCC, UEGCL, UETCL, UEDCL etc), development partners,
NGOs, and private sector actors; iii) Financially viable electricity sector; iv) Domestic Funding opportunities by
MEMD, Uganda Energy Credit Capitalisation Company (UECCC), development banks, United Nations Capital
Development Fund (UNCDF), GETFiT programme, etc; v) International Funding opportunities by bilateral and
multilateral organisations, and venture capitalist; and Investment in off-grid systems.
Constraints Limiting Financing and Investment for Clean and Renewable Energy in Uganda
At International level, they include among others: preference for loans versus grants; approaches used by financial
intermediaries which have stronger inclination to invest in large-scale projects; lack of aggregators that are able to
package up many small projects; minimal investment in risk mitigation; high cost of doing business and lack of
sound investor knowledge of the Ugandan market.
At national level, they include among others: unfavorable or confusing policy and regulatory environment;
institutional weakness due to inadequate capacity, poor management, bureaucracy and lent seeking behaviour;
fragmented funding landscape and a scattergun approach to projects; unfavourable taxation and subsidies regime
which favour mainly large-scale electricity generation rather than small-scale RE projects; Government focus on
investing heavily in on-grid large-scale hydroelectricity projects and Low absorption of funds by MEMD.
At local levels, they include among others: High initial costs of off-grid systems which make most RETs
unaffordable by many households; Poor quality products; Weak marketing and maintenance systems; Inadequate
funding at LGs levels, no budget allocation for clean and renewable energy access and limited knowledge of RETs
(such as solar and efficient cook stove), their use and applicability.
Recommendations
A. MEMD should:
i. Work towards reducing electricity tariffs of all electricity consumers through soliciting for cheaper
financing options (grants or concessional loans) such as climate financing for any energy projects;
ii. Ensure proper energy mix by investing more funds in other RE sources such as solar, geothermal and
biogas;
iii. Mix centralised top-down grid extension with decentralised demand-driven bottom-up strategies (mini-
grids and standalone solutions);
iv. Invest in skills and training for clean off-grid system installation, repairs and maintenance;
v. Decentralise the coordination energy services at DLG levels to support the promotion of RE
investments at the lowest levels;
B. MoFPED should:
i. Put in place a stable and predictable taxation regime for the renewable energy sector;
ii. Work with development partners to devise appropriate financial instruments such as combining grants
with loans in new areas of investment;
iii. Work with MEMD to establish an innovation fund, linked to the renewable energy strategy to provide
access to finance for entrepreneurs and local businesses in the off-grid industry;
iv. Provide financing to UNBS in order to effectively certify, monitor and enforce standards of all RETs.
C. MWE through the Forest Sector Support Department and the National Forest Authority should ensure a
sustainable forest management system through among others, operationalizing Uganda's National Tree Fund
to provide sustainable financing for tree planting.
D. MWE, MEMD, NFA and LGs should advance and upscale the green charcoal production and related regulation
of charcoal production in Uganda.
E. GoU and the Development Partners should support the implementation of the national biomass/charcoal
strategy (2015).
F. Parliament should expedite the passing of the Consumer protection bill.

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G. UECCC should raise awareness of on-lending facilities for RE projects among market participants.
H. Development Partners and NGOs should support LGs to develop and pass ordinances on sustainable use of
biomass, especially firewood and charcoal.
I. Development Partners should prioritise funding agencies that have a track record and experience with
channeling funds to smaller-scale energy projects.
J. Financial institutions should embrace and support the promotion of access and utilisation of RETs through
provision of soft loans to their customers towards acquisition of RETs.
K. MoFPED &MEMD should allocate funds Local Governments to support the promotion of renewable energy
investments at the lowest levels.
L. MEMD should decentralize the coordination of energy services at District Local Government levels to support
the promotion of renewable energy investments at the lowest levels.
M. LGs should recognise the energy sub-sector as part of the ENR and thus allocate funds and recruit staff to
handle energy issues within the LGs. A certain percentage of the ENR condition grant should be earmarked
for RE.
N. LGs should demand that oil and gas royalties are provide and invested in promotion of renewable energy
investments.

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Section 1: Introduction
1.1 Background
Environmental Alert in collaboration with the World Wide Fund-Uganda Country Office (WWF-UCO) is
implementing a project titled, “Increasing access to sustainable and renewable energy alternatives in the Albertine Graben to conserve
high value forest ecosystems to benefit people and nature in Uganda.” One of the key objectives of this project is to strengthen
the capacity of civil society Organisations and networks operating in the renewable energy sub-sector to advocate
for and drive change towards sustainable and renewable energy access. Interventions are being implemented at
national and sub-regional levels involving Civil Society Organisations (CSOs) and networks that are involved in the
promotion of sustainable and renewable energy as well as in issues that are interlinked with or rooted in lack of
access to sustainable, clean and affordable energy. Vertical and horizontal linkages and synergies between the CSOs
and networks at both the national and sub-regional levels are pursued for more structured policy engagements.
The project’s goal is, “Communities living in the Albertine Graben have adopted sustainable and renewable energy alternatives to
reduce dependency on biomass for their energy needs.” The project has three outcomes: a) Civil society in partnership with
other agents of change is transforming government and private sector decisions and practices towards sustainable
& renewable energy development.
b) Government, private sector, civil society actors and local communities have adopted effective strategies and
practices that support sustainable and Renewable Energy access.
c) Government and private sector have put in place an enabling environment that supports increased
financing/investment for sustainable and Renewable Energy development.
1.2 Rationale of the Study
Uganda relies largely on renewable electricity with 895.5 MW installed capacity, of which 630 MW is from large
hydropower, 65.84 MW from mini-hydropower, 64.5 MW from cogeneration and only 136 MW from Heavy Fuel
Oil (HFO) fired plants (UBOS, 2016). However, according to MEMD, less than 20.6 percent of the rural and 55
percent of the urban population have electricity services (MEMD, 2016). This means that most households don’t
have access to electricity and even those that have access to electricity are not using it for cooking /heating due to
high costs, but rather depend on non-sustainable use of biomass energy,2 especially wood fuels using unclean and
inefficient methods. In 2012, Uganda National Alliance for Clean Cooking (UNACC) estimated that only 500,000
households (7 percent of the population) were using clean and efficient cook stoves while Uganda LPG Association
estimates the number of households using LPG stoves in 2014 at 35,000. While the primary demand of biomass is
for cooking purposes, a significant number of key industries in Uganda are also biomass consumers, namely brick
making facilities, tea industry, lime industry, tobacco industry, sugar industry, cement industry, distillery and food
industry.
Globally, there is a transition from non-renewable fossil fuels (coal, oil, and natural gas) to renewable clean energy
sources (such as hydroelectric, wind, and solar power). Many countries are ramping up their commitment towards
renewable energy through innovation and investment. This transition is being motivated by many factors, including
concerns about environmental impacts (particularly climate change), limits on fossil fuel supplies, and prices (Harris
J.M. & Roach Brian, 2016). Operating economies on clean and renewable energy flow represents a key component
of sustainable development.
In Uganda, the use of biomass has negative health, gender, and environmental consequences. Since most households
in Uganda use firewood for cooking with majority cooking indoors with no chimneys and any ventilation, this
exposes them to biomass smoke leading to chronic obstructive pulmonary disease (COPD) which affects more
women and children (Frederik van Gemert et al, 2013). Dependence on biomass energy is increasing pressure on
natural resources, especially forests. The high rates of deforestation in Uganda are partly attributed to charcoal
burning and wood fuel, since forests supply well over 90 percent of Uganda’s energy requirements in form fuel
wood. The National Forest Authority (NFA) estimates that Uganda has been losing 250,000 ha of forests annually
for the period 2005-2010 (MWE, 2016). In most households in Uganda, its women who often know the energy
2 According to UBOS (2013), 96 percent of households used biomass fuels for cooking.

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needs of a home and struggle every day to ensure that food is on the table, despite the hardships they experience
using the energy sources at their disposal. However, it is on rare occasions that the women are involved in acquisition
of clean or improved energy sources.
Government of Uganda has made domestic and international commitments to increase access to modern energy
services to all Ugandans. In the Vision 2040, government targets to increase electricity per capita consumption to
3,668kWh by 2040 by increasing national grid access rate to 80 percent with total installed generation capacity
reaching to 41,738MW. Whereas, in the National Development Plans II (2015/16 – 2019/20) government targets
too increase power generation capacity from 825MW in 2012 to 2,500MW by 2020 through investment in renewable
energy sources including hydropower and geothermal (Republic of Uganda, 2015a). Under the Sustainable Energy
for All (SE4ALL) Action Agenda which was launched by the United Nations (UN) Secretary General in September
2010, Uganda targets to double the share of renewable energy in the energy mix by 2030 (Republic of Uganda,
2015b).
The abundance of renewable energy resources presents a great opportunity for Uganda to ensure energy mix by
investing in all forms such as solar, geothermal, biogas, efficient biomass systems among others. However, until
now, Uganda has found it challenging to utilize many of these renewable energy resources and to ensure energy mix
to accelerate energy access. The biggest challenge is limited financing and investment towards off-grid and efficient
energy sources. Government efforts have largely focused on increasing energy access by increasing supply through
investing in hydro-electricity plants. However, additional capacity comes at a hefty cost. On average, the investment
cost per MW is US$2.6M. This cost does not account for the cost of transmission and distribution to deliver
electricity to end-users. Uganda’s electricity household tariffs are currently US$0.18 per kWh which is high for most
households (Stephane de la Rue du Can et al, 2017) and is hampering energy access.
It’s against this background that Environmental Alert carried out this study to examine the major enablers and
constraints towards unlocking financing and investments for clean and renewable energy access in Uganda.
1.3 Objectives of the Study
The major purpose was to conduct a study on unlocking financing and investments for clean and renewable energy
access in Uganda.
Specifically the study:
a. Provided an overview of the current finance flows towards clean and renewable energy access (off- grid and
on-grid) in Uganda and gauged their potential for providing energy access to Ugandans;
b. Reviewed the current constraints (both policy and practice) at international, national and local levels that are
limiting financing or investments for clean and renewable energy access (off-grid and on- grid) in Uganda;
c. Identified the enablers and available opportunities for investment in clean and renewable energy access (off-
grid and on-grid) in Uganda;
d. Assessed the financing needs for scaling-up clean and renewable energy access (off-grid and on-grid) in Uganda;
e. Suggested recommendations for addressing the underlying gaps/constraints at international, national and local
levels.
1.4 Methodology
The study employed both quantitative and qualitative approaches – mainly making use of document review,
interviews, and focus group discussions. The research team engaged various stakeholders in the energy sector at
both national level and Albertine region. Quantitative and qualitative information was integrated in an iterative
manner so as to identify why and how the observed trends emerge, ensuring the findings are useful for pinpointing
and articulating appropriate recommendations.
The study used four primary data collection methods: secondary document review, key informant interviews (KIIs),
focus group discussions (FGDs) and a validation workshop. Each of these methods is described below.

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a) Document review: This involved the collection and review of secondary data and analytical studies from various
sources, including international databases, government documents, as well as reports on clean and renewable
energy financial mechanisms. Data was collected mainly from OECD Credit Reporting System, MoFPED,
MEMD, Development Partners, Private sector actors and NGOs (mainly in the Albertine region) to identify
the amount spent on clean and renewable energy.
b) Key informant interviews (KIIs): KIIs were conducted with 44 people (6 Females and 38 Males) at national and local
levels (in the Albertine region). These included government officials, development partners, private sector
actors, Local Government officials and CSOs. The key informant interviewees were purposely selected based
on their knowledge and expertise on clean and renewable energy issues. The list of respondents is attached in
the Annex 1.
c) Focus Group Discussions (FGDs): Three FGDs were held with 49 people (5 Females and 44 Males) from 18 districts
in the Albertine region. The FGD participants included private sector actors and NGOs dealing in renewable
and clean energy in the region. Through the FGDs, we were be able to capture stakeholder’s views to access
renewable and clean energy. The list of FGD participants is attached in the Annex 1.
Figure 1: FGD meeting with NGOs and CBO representatives in Masindi. Source: Environmental Alert.
d) Validation meeting: A validation workshop was held on 17th May, 2017 with selected stakeholders. At the
workshop, the research team presented the draft preliminary findings, conclusions and recommendations and
facilitated discussion among the participating stakeholders around them. The primary objectives of the
validation workshop were to better understand the study findings, increase their utility and improve the
consistency of the report findings, conclusions and recommendations with respect to stakeholders’ views. A
secondary, albeit important, objective of the validation workshop was to disseminate the study findings to key
stakeholders.

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Figure 2: The Lead Consultant, Mr. Daniel Lukwago presenting the draft report during the validation meeting held on
17th May, 2018. Source: Environmental Alert.
For quality control purposes, at the commencement of the study, the research team developed and shared the
inception report for the study with EA technical team. The methods, approaches and tools were presented by the
research team which were reviewed by the technical team from EA. In addition, a draft report was presented to the
EA technical team that reviewed it and provided comments.
Figure 3: Mr. Wilson Wafula; Commissioner, Renewable Energy MEMD, giving his Remarks during the validation
meeting held on 17th May, 2018. Source: Environmental Alert.

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1.5 Scope and Coverage
The study was carried out at both the national and 18 districts3 in the Albertine region. In total, the study conducted
interviews from 84 respondents at the national and district level. The districts were purposely selected from the
Albertine region because it’s where the project is being implemented. The participants were also purposely selected
basing on their involvement, knowledge and expertise in the energy sector, especially on clean and renewable energy
issues. The study was undertaken between November 2017 and March 2018.
1.6 Limitations of the Study
Adequacy, quality and availability of data and information: There were difficulties in accessing official data on financing
for the renewable energy sector, especially from private sector and development partners. In addition, there is limited
disaggregated data on financing for the different renewable energy types which made it difficult to come up with
specific information on financing for each type of renewable energy. Consequently, this report was drafted using a
variety of estimates based on secondary data sources and to some extent, key informant interviews.
In addition, it’s hard to find disaggregated data on financing for different types of renewable energy sources in
Uganda. Thus, this study was not able to provide disaggregated data on each renewable energy source.
Limited interviews at national levels: Despite numerous requests, the study team was only able to interview 53 percent
of the potential stakeholders in the energy sector at national levels. This was partly attributed to the timing of the
study (during Christmas and beginning of year) and a lengthy bureaucratic process to obtain interviews, which made
it hard for most responsible people to participate in this kind of study. Therefore, the study mainly relied on literature
review of relevant studies, publications and databases of key institutions.
Sample Size: The limited resources allocated to this study imposed a binding constraint on the number of local
governments that could be covered. However, we are confident that the three case study districts (Arua, Kagadi &
Kasese) provided a good picture of what is happening in most LGs in the Albertine region. Nonetheless, the study
findings, conclusions and recommendations can be applied to the entire country since the study will also be carried
out at the national level.
Methodology: Although we are cognizant of the Multi-Tier Framework (MTF4) for measuring energy access, however,
this study was based on the binary system of measuring energy access (have or have not).
3 Arua, Buliisa, Hoima, Kagadi, Koboko, Kyengojo, Masindi, Moyo, Nebbi, Nebbi, Kaseses, Packwach, Bundibugyo,
Bundibugyo, Kabarole, Rubirizi, Kibaale, Rukungiri.
4 the ability to avail energy that is adequate, available when needed, reliable, of good quality, convenient, affordable, legal,
healthy and safe for all required energy services.

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Section 2: Financing and Investment towards Clean and Renewable Energy Access in Uganda.
2.1 Current finance flows
According to the Renewable Energy Policy 2007, modern renewable energy means renewable energy resources that
are transformed into modern energy services like electricity, which can be generated from water power, wind power,
solar energy, geothermal energy and biomass cogeneration. Whereas clean fuels are derived from renewable energy
resources like biogas, ethanol, methanol, hydrogen, biodiesel or solar water heating. In the context of the policy,
modern biomass technology includes energy efficient technologies, like improved charcoal and firewood stoves for
both domestic and institutional applications.
Financing and investment towards renewable energy in Uganda has been increasing over the last decade when the
sector was liberalized leading to increased investment by the private sector. Based on the available data from the
government of Uganda (MEMD & ERA), and OECD5, total financing towards renewable energy sector is estimated
at USD 3.1 billion in 2016/17. Over 70 percent (USD 2.3 billion) is by the private sector and 20 percent (USD 629
million) is by GoU budget allocations (See Figure 4). Hydro-electricity takes the largest chunk of financing followed
by solar and to a small extent, biomass /bagasse cogeneration.
Figure 4: Financial Flows in the Energy Sector in Uganda (US $ Million).
Source: Author’s computations based on data from MoFPED, OECD & ERA.
Under the Government of Uganda (GoU), we captured only on-budget allocations to MEMD, REA, ERA,
UEDCL, UEGCL, and UETCL. However, we only captured budget allocations to REA, ERA, UEDCL, UEGCL
and UETCL for FY 2015/16 and 2017/18.
The GoU is only providing capital to projects and companies in a restricted number of sub-sectors in the energy
sector. These include large hydro at significant scale (these take a lion’s share of the sector funding (see Figure 5),
and small-hydro, solar at a very limited scale, with biomass power and biogas sub-sectors not benefitting from
domestic public grants.
5 Data extracted on 19 Apr 2018 15:47 UTC (GMT) from OECD.Stat:
http://stats.oecd.org/index.aspx?DatasetCode=DACSECTOR.
674 632
1,083
629
97 66
61
120
1,339 1,505
2,008
2,325
-
500
1,000
1,500
2,000
2,500
3,000
3,500
2013/14 2014/15 2015/16 2016/17
USD(MIllion)
GoU (Approved on-budget) ODA Private sector

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7
Figure 5: Intra-sectoral Budget Allocations in the Energy Sector.
Source: Author’s computations based on data from MoFPED (approved budget estimates).
GoU and its development partners are mainly focused on grid extension, the development of large hydro projects
and to some extent large solar PV has resulted into the lack of instruments oriented towards private financing of
technologies for cooking and for off-grid that would impact the greatest (and poorest) proportion of the Ugandan
population.
Therefore, there are significant opportunities for development partners and the private sector to scale up support
to sub-sectors where technologies and projects benefit poor and rural populations. This includes significant support
to off-grip sources such as solar, biogas, biomass and for cooking. This should be undertaken in financial
collaboration with national, local government agencies and departments, and local financial institutions.
2.2 Potential for providing energy access to Ugandans
Uganda has considerable unexploited renewable energy resources for energy production and provision of energy
services. These resources include biomass, geothermal, large scale hydro, mini/micro/pico hydro, wind and solar
energy. The renewable energy potential of Uganda is shown in Table 1.
Table 1: Renewable Energy Potential
Source: ERA (2014a).
Uganda plans to use renewables to increase power capacity, improve electricity access and expand rural
electrification. In the Vision 2040, Uganda proposes to increase electricity capacity to 41,738 MW to drive
industrialization via expansion of power capacity including hydro, geothermal, solar, biomass, among others.
6% 5% 5%
26%
5%
93%
85% 86% 39% 77%
0%
10% 8%
33%
17%
0%
20%
40%
60%
80%
100%
120%
2012/13 2013/14 2014/15 2015/16 2016/17
Share
Energy Efficiency Promotion Renewable Energy Promotion
Increased Rural Electrification Thermal & Small Hydro Power Generation (UETCL)
Large Hydro Power Infrastructure Rural Electrification Agency
Energy Source Estimated Electrical Potential
(MW)
a. Hydro 2,000
b. Mini-hydro 200
c. Solar 200
d. Biomass 1,650
e. Geothermal 450
f. Peat 800
g. Wind -
Total 5,300

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Renewable energy expansion is currently being supported by feed-in tariffs (FiT)6. The priority renewable
technologies for REFiT in Phase 2 include: Small hydro power plant; geothermal power plant; Bagasse power
generation; Landfill gas power plant; Biogas; Biomass/ Municipal Solid Waste (MSW); and Wind (ERA, 2014a).
a. Hydro power
Government in collaboration with the private sector and with support from development partners is investing
heavily in on-grid large scale hydroelectricity projects7 which will increase electricity production to over 3,247 MW
over the next decade. The large hydro infrastructure was allocated over two-thirds of the MEMD budget in 2017/18.
In addition, there are over 50 potential sites identified on small rivers for generation of electricity of over 164 MW
(see Annex 2). The GETFiT programme will enable the development of some of these small hydro (1-20 MW)
projects. The increased electricity production will lead to increase in energy access to most Ugandans, if the challenge
of high electricity tariffs is addressed.
b. Solar Photovoltaic (PV)
The solar PV market in Uganda has steadily grown over the last 15 years with new players, including foreign
investors, entering the market with over 200 companies involved in the solar business (both PV and solar thermal),
72 of whom are also members of the Uganda Solar Energy Association (DFID & MEMD, 2016). Existing solar
data clearly shows that Solar Home Systems (SHS) are the best option for providing electricity services to scattered
homes in rural areas and households with low energy consumption, as they don’t require extension of grid lines,
which is not only costly but has also become challenging in the Ugandan context due to the difficulties in acquisition
of Way Leaves and the Right of Way (DFID & MEMD, 2016). However, at present, solar photo-voltaic (PV)
electricity is not generated in sufficient quantities for inter-connection to the national grid. To address these
challenges, the Government of Uganda and the GETFiT programmes introduced a Solar-PV under the GETFiT
Premium Payment Mechanism (GFPPM), two developers (Access Solar and Tororo North Solar) were awarded
licenses to develop two (2) projects of 10MWp Projects. In addition, REA in partnership with EU and GIZ is
establishing 25 Mini grids in villages of Northern Uganda, 15 Mini grids in the Southern Service Territory of Rakai/
Isingiro districts.
Development Partners and NGOs have helped to stimulate off-grid systems (especially solar PV) through a variety
of incentives and capacity building measures. Hundreds of thousands of small off-grid installations are in place.
These include: Pico Solar Systems which are widely available over the counter; Solar Home Systems that provide
significantly more power than Pico solar and Institutional PV Systems provide power in schools, health centres,
police posts and other institutions.
c. Biomass /Bagasse Cogeneration
There is potential of 460 million tons of biomass standing stock with a sustainable annual yield of 50 million tons.
Currently, three sugar factories are developing generation plants using sugar cane waste (Bagasse), as fuel. These
include Kakira (32 MW), Mayuge (9 MW) and Kaliro (11.9 MW). In addition, REA supported Pamoja Energy
Limited in the generation and sale of electricity from a 32kw biomass gasification project in Mpigi District and an
11kw solar-biomass gasification hybrid project in Mityana district. Furthermore, the African Development Bank
(AfDB) approved a USD 1 million grant to support Earth Energy Limited for the development of a 20MW biomass
power plant in northern Uganda8.
There are initiatives (such as Uganda Domestic Biogas Programme, and Africa Biogas Partnership Programme) that
promote and facilitate the preparation and implementation of a large-scale domestic biogas. Through such initiatives,
institutions such as schools have been able to reduce their energy expenditure. For instance, Kansanga Primary
school, Kampala, reduced the school’s energy expenditure (from firewood to biogas) reduced by UGX 1.5M per
month by use of bio-latrine (biogas generation) [Kigali Dan K., 2017].
d. Waste to energy
6 FiT are an internationally recognized regulatory mechanism used to promote and increase the amount of electricity generated from
renewable sources, by providing a fixed tariff based on the levelized cost of production for a guaranteed period of time (ERA< 2014a).
7 Isimba (183MW), Karuma (600 MW), Ayago (840 MW), Muzizi (44.7MW), Nyagak III (504 MW), Agago-Achwa (83 MW),
Oriang (392 MW), and Kiba (600 MW).
8 https://www.esi-africa.com/uganda-afdb-supports-biomass-power-plant/.

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According to available estimates, it is projected that Kampala city alone generates 730,000 tons of waste per year,
of which 70 percent is organic waste. There are major districts around the country, with considerable waste volumes
such as Wakiso, Mbarara and Jinja, all of which represent considerable waste to energy potential (UIA, 2017).
However, currently, there is minimal investment in conversion of municipal waste to energy.
e. Geothermal
Geothermal energy, is one of the possible alternative renewable energy sources in Uganda, which can supplement
other sources of energy. More than 40 geothermal sites were studied, with an aim of establishing their electricity
generation prospects. The investigations revealed three major potential areas for detailed exploration, namely;
Katwe-Kikorongo, Buranga and Kibiro. The combined geothermal potential from these three major areas is
450MW. These are all situated in or near the Western Rift Valley of Uganda (zone of most recent volcanic activities)
[ERA, 2014]. However, due to the risks, high drilling costs as well as the long lead time required to complete the
studies and development, there is likely to be no generation from geothermal until 2025 (ERA, 2016a).
f. Wind
Based on wind data collected by the Meteorology Department, it was concluded that the wind energy resource in
Uganda is only sufficient for small-scale electricity generation and for special applications such as water pumping,
mainly in the north-eastern part of Uganda (Karamoja) and on the shores of Lake Victoria. Small industries in rural
areas, where targets for a mill range from 2.5kVA to 10kVA could benefit from the wind resource.
2.2.1 Mechanisms being used to enhance investment in renewable and clean energy
Some of the mechanisms in place aimed at enhancing financing and investment in renewable and clean energy in
Uganda include:
a. GETFiT Programme. The main objective is to overcome investment barriers for private developers of small-scale
(1-20 MW) renewable energy projects. The programme is jointly designed by the GoU, ERA and KfW to
leverage more private capital into renewable energy generation. GET FiT is supported with grant funding from
the Government of Norway (EUR equivalent of about 17 million), the Government of the United Kingdom
(EUR equivalent of 40 million), the Government of Germany (EUR 15 million), the European Union (EUR 20
million) as well as the World Bank through a Partial Risk Guarantee; committed US$ 160 million. The
programme aims at realizing about 20 energy generation projects with a total installed capacity of roughly
170MW. Since its launch in March 2013, the GET FiT Uganda programme has created a unique momentum
for the development of small-scale, private renewable energy projects in Uganda. GET FiT has approved 17
projects with a combined generation of 128 MW of Small Hydro, Biomass, Solar photovoltaic and Bagasse
generation projects which will be commissioned within 2 to 3 years from the start of construction. Overall,
GET FiT has attracted more than US$ 450 million of private investment into Uganda (ERA, 2018)9;
b. Energy Fund. The Energy Fund was created during the 2008/09 budget, with allocations from tax revenue, in
response to the challenges the country was facing at that time with electricity supply. The Energy Fund is
required to spend at least 70 percent of its money on renewable energy, and the expenditure to-date has been
devoted to two large hydroelectric projects: Karuma and Isimba (Whitley S and Tumushabe G, 2014);
c. Rural Electrification Fund (REF). The REF was established ‘to promote the equitable coverage of rural
electrification in Uganda through increased provision of access to electricity for economic, social and household
use’. REF invests in transmission lines and in power-distribution networks, isolated grid projects comprising
generation and distribution activities, and in stand-alone systems using renewable energy such as solar home
systems (MEM, 2012). The REF, which is administered by the REA, is financed through: a levy of 5 percent
applied on all bulk electricity sales, parliamentary appropriations, surpluses from the operations of the ERA and
grants from donors and loans (including the World Bank) (Tenenbaum et al., 2014);
d. Uganda Energy Credit Capitalization Company (UECCC). The UECCC is a Government Institution set up under
the Companies Act as a Company Limited by Guarantee and not having share capital. It was operationalized in
2009 under Energy for Rural Transformation phase two (ERT - II) primarily to facilitate investments in
9 http://www.era.or.ug/index.php/opportunities/investment/renewable-energy-investment-guide.

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Uganda’s Renewable Energy Sector, with a particular focus to enabling private sector participation. UECCC is
the Administrator of the Uganda Energy Capitalization Trust (“The Trust”) which is a framework for pooling
resources from Government and Development Partners and to channel the same to Renewable Energy Projects
and Programmes;
UECCC’s support for Renewable Energy Programmes is normally provided by way of Credit Support
Instruments (CSIs) to Participating Financial Institutions (PFIs) to facilitate provision of credit for Renewable
Energy projects; or in the form of Technical Assistance to the projects. Some of these CSIs include:
i. Solar Loan Programme; This financing facility is extended to Tier IV Financial Institutions (Micro Finance
Institutions & Savings and Credit Cooperative Organisations-SACCOs) for on-lending to their
members to acquire solar systems. This facility aims at addressing the affordability barrier posed by the
initial upfront cost of acquiring solar systems by clients in the rural communities. UECCC is currently
working with Tujijenge Uganda Limited, Hofokam Limited, EBO SACCO Limited and Buyanja
SACCO Limited to extend Solar Loans to households and commercial enterprises.
ii. Working Capital Facility for Solar Companies; This facility is funded by the World Bank under the ERT III.
UECCC is the implementing agency of the Financial Intermediation sub component. Under this
Facility, UECCC is extending Lines Of Credit to Financial Institutions to provide Working Capital
loans to Solar Companies that are selling systems on a Pay As You Go, Pay Plan and Cash Business
models. The FIs accredited to offer the Facility are: Centenary Bank, Barclays Bank Uganda, Stanbic
Bank Uganda, Finance Trust Bank and Post Bank Uganda.
iii. Connection Loan Programme for On-grid Connections; In partnership with Centenary Bank and West Nile
Rural Electrification Company (WENRECO), UECCC piloted a Power Connection Loan facility to
enable residents and businesses in West Nile region to get access to electricity from Nyagak Hydro
Power plant. This facility has been rolled out to all 65 branches of Centenary Bank country wide. The
main objective of the Connection Loan Programme is to address the affordability barrier faced by
households and/or commercial enterprises on account of the upfront costs associated with connecting
to grid electricity. The eligible purposes include; wiring costs, pole services, Utility connection fees
(meter and drop wire from the pole), and conversion costs from diesel powered systems to grid
electricity where applicable.
iv. Domestic Biogas Loan Programme; UECCC is currently implementing a pilot Biogas Financing Programme
in partnership with EBO SACCO Ltd through extended financing to EBO SACCO for on-lending to
its members (households and/or Business Enterprises) in the rural areas to acquire biogas systems for
lighting and cooking. On successful completion, the facility will be rolled out to the whole country.
v. Transaction Advisory Services and other early stage support; UECCC provides support for power generation
project developers through an Early Stage Support programme funded by KfW. The Early Stage
Transaction Advisory Framework was developed as a tool to overcome the existing bottlenecks faced
during the early stages of the Project Development cycle for small-scale renewable energy projects,
with a view to increasing opportunities for private Project Financial Closure. During the course of the
project, 6 private project developers were awarded assistance through the programme including:
Savimaxx- 8.5 MW Lower Nsongya Mini Hydropower Project; Network Civil Engineering 4.0 MW
Nyabuhuka – Mujunju Small Hydro Power Project; SAIL Sugar Processing - & Bagasse Cogeneration
Plant (SAIL Project)of 11.9 MW; Earth Energy 20 MW Biomass Power Project; African Renewable
Energy (ARE) 3.5 and 17 MW ESIA Mixed Farms Bagasse Project in Adjumani and Cresta 5 MW Run
of the River Hydro Power Project.
e. Subsidies and incentives. Some of the incentives provided by government and ERA to promote development of
renewable energy include: The Renewable Energy Feed in Tariff (REFIT), long term developed Standardised
Power Purchase Agreements (PPAs) and carbon credits through Clean Development Mechanism (CDM)10.
This has resulted into the reduction in advisory service costs and the time required to negotiate the first
10 The revenue inflow to the subject project from the sale of carbon credits will not affect the Feed in Tariffs downwards.

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initialising of a standardised PPA by a developer and UETCL (from six months to one week)11. This has
encouraged more investors in the energy sector because of the stability of the tariff and the availability of the
buyer, UETCL. There are also a range of regulatory incentives under the Energy Fund and Rural Electrification
Fund for private investors in the energy sector which reduces transaction costs for both project developers and
investors.
“There is a guarantee by GoU through the rural Electrification Fund for licensed energy projects this encourages investments
and also gives security to the investors” – ERA Official.
In addition, some LGs have put waivers on payment of business licenses for any players dealing in RETs. A
case in point is Kasese Municipality.
“Any person dealing in RETs doesn’t pay for a trading license, this has supported many people in joining the trade hence
increasing access to RETs across the district” - Head ENR-Kasese DLG.
Furthermore, government with support from development partners (World Bank and Kfw) is connecting all
households within a certain radius free of charge to grid electricity. However, the household has to meet the
cost of wiring the house which in most cases is still high;
f. Energy Rebates: under this arrangement, ERA is able to effect reimbursement to an eligible person/firm who has
designed, financed and constructed electricity distribution infrastructure; the reimbursement is in terms of
energy consumed where a customer’s monthly bill is to be off-set through an Energy Rebate12. This has
encouraged private individuals with small and medium enterprises to invest money that will later be offset up
to 40 percent of the bill. Many have gone an extra mile to distribute the energy to neighboring households to
increase on the energy offset by the end of the year. It was noted that this only applies to a minimum length of
500 meters;
g. Provision of credit for renewable energy technologies (RETs). Some financial institutions such as Pride Microfinance,
Centenary Bank, Finance Trust Bank, Barclays Bank Uganda, Stanbic Bank Uganda, Finance Trust Bank, and
Postbank Uganda are providing for working capital loans to RETs service providers like solar companies with
credit support from UECCC, and also are for on-lending to end-users (households and commercial enterprises)
for solar systems acquisition. Consequently, a number of companies are able to provide affordable and quality
solar systems to households and commercial enterprises and solar is slowly becoming more popular than before.
“We are partnering with a number of organisations both government (UECCC) and NGOs to provide loans to clients
who want to access these renewable energy products mainly solar and improved cook stoves.” – Centenary Bank
Official.
12 The Monthly Rebate amount shall be 40% of the actual active energy (kWh) units consumed by the customer, as metered
and billed by the distribution utility.
Box 1: Centenary Bank Financing for RETs.
 Has been partnering with both government and NGOs to provide credit/ loans
for renewable energy, especially solar and cook stoves.
 Piloted the power connection loan with WENRECO in West line. Now being
marketed in all branches all over the country.
 Contributed 50 percent of the loan pool from UECCC towards acquisition of solar
systems and working capital for companies.
 Provide Cente-Solar loan to finance standalone solar systems.
 Has dedicated staff to manage the relationship for UECCC and UREA.
Source: Interview with Manager Consumer Lending on 9th March, 2018.

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In addition, some companies such as M-Kopa, Phenix, Solar Delight, Bright Life Finca and Village Power
provide soft loans to enable households, especially to acquire Solar Home Systems using Pay As You Go Solar
system and other mechanisms. Through this, the household can acquire the SHS through paying in installments.
“We provide them financing since they can’t pay upfront. They make daily payments or break down these payments in chunks
that rural people can afford since they don’t have monthly salary but rely on agricultural financing which is irregular. We allow
people to pay money when they have it. They slowly pay for their system until when they own it. Some pay for 1 year, others 1
and 1/2, 2 or 3 years.” - M-Kopa.
Furthermore, some organisations such as WWF-UCO are providing funding to enable both end users and
suppliers to increase access and utilisation of RETs. The funding is largely geared at reducing the risk of private
sector players to enable them reach the hard-to-reach areas and also enabling end users to purchase RETs,
especially Solar Home Systems. With such funding, suppliers have opened outlets of RETs in remote trading
centers. This has enabled people in hard-to-reach and remote areas to access clean and renewable energy
products.
“…we sensitize communities to save money in their SACCOs so as they can acquire loans to purchase some RETs, if they save
20% on the cost of the technology, we provide them with the technology and pay the 80% in installments” - Kasese People’s
SACCO;
h. Provision of enabling environment. With support from WWF-UCO, GIZ and UNHCR, DLGs in the Albertine region
have developed District renewable energy access strategies and some have developed guidelines for
mainstreaming energy in their District Development Plans (DDPs). In addition, some DLGs such as Arua have
enacted ordinances that prohibit indiscriminate cutting of trees for charcoal burning. This has discouraged
households from using charcoal and to adapt more efficient energy sources such as improved charcoal stoves.
Some DLGs are implementing responsible timber trade where traders apply for licenses to produce timber and
there is routine law enforcement in the conservation areas and on main trade routes to arrest any illegal activities.
The major challenge is inadequate resources (funds and personnel) for effective implementation of these
strategies and ordinances.
“…the ordinance on regulation of trade in charcoal burning and trade is in the final stage of reading by the district council” –
Environment Officer, Arua DLG;
i. Capacity building. Among the challenges of low uptake of clean and renewable energy in Uganda is limited capacity
by the suppliers to install and maintain RETs. To address this challenge, some players (such as WWF-UCO and
her partners) are training suppliers and technicians on proper installation and maintenance of RETs, especially
solar energy;
j. Community sensitisation. Some NBOs have collaborated with LGs to sensitize communities on the need to
appreciate the benefits and availability of renewable and sustainable energies such as solar and improved cook
stoves. This is done through radio talk-shows, sales agents and community meetings or dialogues. In addition,
some NGOs have organised community dialogues on innovative methods for financing clean energy.
Box 2: Sustainable financing mechanisms for RETs.
 Pay as you go models where customers pay an upfront cost and then small installments
over an agreed upon time period for the energy service using mobile phones.
 Customers can access credit from SACCOs, VSLAs or other associations to meet the
upfront cost of acquiring off-grid solutions, and then pay back later with low interest.
 Revolving funds- the funds recovered from installments paid by customers that have
acquired off-grid solutions such as solar PV systems facilitate extension of products or
services to new customers.
 Cost sharing- where the suppliers and the user-users (consumers) share the cost the
RETs.
 Flexible through instalments based on agricultural seasons.

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“Whenever I am in the community under the various ENR programmes, I talk about the need to adapt to the new clean
energy technologies that will reduce overdependence on Biomass like biogas”- Head ENR-Kasese DLG;
k. Quality control and certification. To address the challenge of counterfeits and poor quality RETs, with support from
World Bank under the ERT project, the capacity of Uganda National Bureau of Standards (UNBS) is being
built in certification and quality control of all RETs in Uganda. According to the UNBS, some of the RETs
have been categorized and profiled as high-risk products in terms of safety to the users and are required to be
inspected from the countries of origin before they come in through the Pre-Export Verification of Conformity
to Standards’ (PVOC). In addition, the energy efficiency standards importers User Guide has been developed
and Energy efficiency lighting test bench was installed at UNBS premises (MEMD, 2017). Furthermore, UNBS
intends to retest all electricity meters currently in use and will also test new electricity meters before the power
distribution companies install them for conformity to the standards. However, Umeme requested ERA to
consider the corresponding costs to execute the meter testing within the tariff computation as operational costs
for installed meters and capital costs. This will increase the cost of installation of electricity which is already
high.
Other initiatives towards improving the quality of RETs include: a) Companies that access financing through
UECCC are pre-qualified and must meet the Lighting Global certification13. So far, over 13 companies dealing
in solar have been pre-qualified.; b) Uganda National Alliance for Clean Cooking (UNACC), is working with
the UNBS towards defining some guidelines / benchmarks for cook stove performance and labelling (UNACC,
2015); c) In the Albertine region with support from WWF, NGOs (KIIMA Foods, RICE-WN and KCSON)
are providing quality RETs (such as solar system and improved cook stoves) to rural communities.
2.3 Financing needs for scaling-up clean and renewable energy access in Uganda.
The evidence on how much money is needed for scaling-up clean and renewable energy access inUganda, is quite
limited. The absence of updated energy sector investment plan makes it hard to estimate the amount of financing
and investment in clean and renewable energy.
The estimates provided in the study are based on the Rural Electrification Strategy and Plan (2013-2022) and the
Scaling-Up Renewable Energy Programme Investment Plan, which estimate that over USD 950 million and USD
455.1 million is needed by 2030, respectively (REA 2013 & Republic of Uganda, 2015a). However, it’s important to
recognise that these estimates underestimate the broad financing in the renewable energy sector since they only
cover rural areas and public sector funding.
According to the Rural Electrification Strategy and Plan (2013-2022), the global cost of implementing the plan is
USD$951.6 million, summarised in Table 2 and segregated into three general categories:
i. On-Grid Electrification Financing, totaling to $866.5 million, as the estimated capital cost of electric
distribution system construction and customer densification, by service territory, including consumer
densification within Umeme’s service area.
ii. Off-Grid Electrification Financing, totaling to $55.4 million, comprising the solar PV programme
associated with the installation of 130,000 new solar home systems throughout the 13 service territories,
the capital cost of islanded mini-grid projects estimated to add 8,500 new service connections and the cost
of pre-investment support for advancing the development of larger distributed power generation facilities
directly serving the power supply requirements of the on-grid electrification service providers.
iii. Other Costs, totaling to $29.7 million, including long-term technical assistance and training programme
costs during the RESP period, the cost of ESP working capital grants to support start-up costs and ESP
customer financing programme assistance relating to service connection fees, house-wiring and the
purchase cost of electricity-using appliances and productive equipment.
13 Lighting Global maintains Quality Standards that set a baseline level of quality, durability, and truth in advertising to protect
consumers. More details can be accessed at: https://www.lightingglobal.org/quality-assurance-program/our-standards/.

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Table 2: Financing requirements of the Rural Electrification Strategy and Plan
Funding Components Amounts (USD Millions)
On-Grid Electrification Financing 866.90
Off -Grid Electrification Financing 55.40
Other 29.70
Total 952.00
Source: REA (2013).
According to the SREP Investment Plan, the total estimated budget for implementing the SREP Uganda Investment
plan is USD 455.1 million. SREP funds will be implemented by AfDB, WB and IFC. An amount of USD 33.8
million will be allocated to the geothermal project and will be divided between AfDB (USD 31.8 million) and IFC
(USD 2 million). Project 2 will benefit from USD 9.4 million in SREP resources to be implemented by the AfDB,
while Project 3 will absorb the remainder of SREP resources in the tune of USD 6.8 million which will also be
implemented by AfDB. Table 3 shows the financing plan for the entire SREP Investment Plan.
Table 3: Financing requirements for the Scaling-Up Renewable Energy Programme Investment Plan
Projects GoU SREP MDBs PS DPs/
Others
Total
Geothermal 7 33.8 70 230 48 388.8
Solar PV Off-grid Mini-grid and Net
Metering
2.1 9.4 14.6 0 0 26.1
Wind Assessment & Pilot Wind Farms 5.4 6.8 14 0 14 40.25
Total 14.5 50 98.6 230 62 455.1
Source: Republic of Uganda (2015a).
Both strategies and plans show that there is need for significant scaling-up in investment from current levels, if
Uganda is to achieve its electrification targets. There is specific need to increase funding support towards off-grid
systems such as solar home systems or mini-grids in rural areas, because most Ugandans are in rural areas.
Mapping the finance landscape for renewable energy in Uganda is very complex, so, we have summarised in Table
4 some of the key financing needs for different players such as energy users, energy providers, financial institutions
and government.
Table 4: Example of finance needs and instruments by actor
Actor Finance needs Financial source or instrument
Energy User
− Paying for new energy products or service
e.g. grid connection, monthly tariffs
− Paying for related energy equipment e.g.
fridges, TV, power tools, hairdryer
− Paying for fuel, maintenance and repairs
− Personal savings
− Local savings group
− Government provided subsidy (e.g.
lifeline tariffs, connection
subsidies)
− Loan e.g. from microfinance
institution
− Retailer finance scheme e.g. pay-as-
you-go, pay-to-own.
Energy
Provider
− Seed capital for early stage research and
enterprise development e.g. concept
design, feasibility analysis, piloting
− Working capital e.g. to buy inventory
− Grants
− Concessional Loans
− Market-rate loans
− Equity

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Actor Finance needs Financial source or instrument
− Investment capital for growth period
− Solutions to address customer
affordability gap
− Credit guarantees
− Working capital fund
− Consumer subsidy / business
model innovation
− Risk mitigation instruments e.g.
political risk insurance
− Results-based financing
Financial
Institutions
− Concessional finance to channel finance
to energy providers and users
− Risk guarantees and risk mitigation
instruments
− Capacity development
− Demonstrable and investable models
− Grants
− Concessional loans
− Credit guarantees
Government
− Policy and regulatory development:
identifying and reforming policy, laws
and regulations needed to attract
investment e.g. feed-in-tariffs, product
standards
− Capacity building and training e.g. energy
ministry officials, regulators, universities
− Market development e.g. resource
mapping, feasibility studies, business
development services
− Reforms to wider enabling environment
e.g. rule of law, infrastructure, property
rights
− Grants and loans from
development finance institutions
− Domestic taxes
Source: Rai, N, Best, S and Soanes, M (2016).

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Section 3: Opportunities for Investment in Clean and Renewable Energy Access in Uganda
3.1 Supportive policy and regulatory framework
a. Comprehensive National Development Planning Framework
The Comprehensive National Development Planning Framework (CNDPF) provides for a 30-year vision to be
implemented in three 10-year plans, six 5-year National Development Plans (NDPs), Sector Investment Plans
(SIPs), Local Government Development Plans (LGDPs), and Annual Work plans and Budgets. The key target set
out in the Uganda Vision 2040 is to increase electricity per capita consumption to 3,668kWh by 2040 by increasing
national grid access rate to 80 percent with total installed generation capacity reaching to 41,738MW. Among the
priorities of the NDP II (2015/16 – 2019/20) is investment in abundant renewable energy sources including
hydropower and geothermal, so as to increase power generation capacity from 825MW in 2012 to 2,500MW by
2020 and expansion of the national electricity power grid network (Republic of Uganda, 2015b).
b. International commitments
Uganda is a signatory to the United National Sustainable Development Goal (SDG). SGD goal 7 is ensuring access
to affordable, reliable, sustainable and modern energy for all. In addition, Uganda is among the 14 early movers in
Africa that started the process for developing the Sustainable Energy for All (SE4ALL) Action Agenda which was
launched by the United Nations (UN) Secretary General in September 2010 to achieve three inter-related goals by
2030 of: (i) providing universal access to modern energy services, (ii) doubling the global rate of improvement in
energy efficiency, and (iii) doubling the share of renewable energy in the global energy mix by 2030. Uganda’s
SE4ALL initiative was officially launched in 2014 through validating its Action Agenda and setting quantitative
indicators for the three goals (Republic of Uganda, 2015a).
c. The Electricity Act, 1999 (Cap 145)
The act governs the activities of the Electricity Supply Industry. The Act provides for the establishment of an
Independent Regulator with the mandate to regulate the generation, transmission, distribution, sale, export, import
and distribution of electrical energy in Uganda. The enforcement of the Act, is supplemented by Statutory
Instruments and Guidelines approved by ERA. Other organs such as the Electricity Disputes Tribunal, the Rural
Electrification Agency (REA) and Board (REB) were established under the Act to provide guidelines for resolution
of sector disputes, promote, support and provide for rural electrification programmes, respectively14.
d. Energy Policy 2002
The guiding policy governing the overall energy sector in Uganda is the Energy Policy for Uganda 2002, with the
goal of “meeting the energy needs of Uganda’s population for social and economic development in an environmentally sustainable
manner.” In the policy, the GoU laces specific emphasis on the electricity supply industry, firstly; by seeking to make
the power sub-sector financially viable and able to perform without subsidies from the government budget.15
“The energy policy puts a lot of emphasis on initiatives to conserve biomass resources that include the promotion of improved
stoves, as well as afforestation. However, the impact of these efforts is still limited” – MEMD Official.
The energy policy is supported by other sub polices and strategies targeted towards promotion and sustainable use
of renewable energy such as:
i. Renewable Energy Policy, 2007; The overall objective of the policy was to increase the use of modern renewable
energy so that its proportionate use increases from the then 3.8 percent to 61 percent of the total energy
consumption by the year 2016. Among the special focus of the policy is to establish an appropriate financing
and fiscal policy framework for RET investments (MEMD, 2007).
ii. Rural Electrification Strategy and Plan (RESP) 2013-2022; The overall objective of the plan is to position the
electrification development programme on a path that will progressively advance towards achievement of
universal electrification by the year 2040, while ensuring the displacement of kerosene lighting in all rural
Ugandan homes by 2030. The plan targets to achieve 26 percent rural electrification rate (i.e. consumers

17
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who will be utilizing electricity in their homes, businesses or institutions) by 2022 from the current 7
percent.
iii. Biomass Energy Strategy, 2013; Propose rational and implementable approaches to manage the biomass energy
sector.
iv. Scaling-Up Renewable Energy Programme Investment Plan; The SREP will assist the GoU in meeting the country’s
targets set in the United Nations (UN) SE4ALL Initiative to achieve three inter-related goals by 2030 by:
promoting an increase in access to modern energy services for over 98 percent of the population and
helping to double the share of renewables in the energy mix.
v. Energy Efficiency Strategy for 2010-2020; The Strategy is strongly programmed and activity oriented,
categorizing the five main areas of intervention into ‘Pillars’ of Energy Efficiency: Awareness and Information,
Training & Education, Research and Development, Financing and incentives, and Legislation &
Framework (MEMD, 2015).
vi. Renewable Energy Feed-in Tariff (REFIT); The REFiT is designed to provide price certainty to renewable
energy generators. The policy covers a number of technologies and is attractive because it is based on the
levelized cost of each technology and not the avoided cost. The priority renewable energy technologies for
REFIT in Phase 2 include; hydro, bagasse, landfill gas, biogas, wind, biomass/ municipal solid waste (MSW)
[ERA, 201816). According to ERA, REFIT applies to small-scale renewable energy systems, of prescribed
priority technologies, up to a Maximum Installed Project Capacity of twenty (20) MW, and greater than 0.5
MW, as defined by the Electricity Act 1999.
a. “To encourage more financial investment in the sector, ERA adopted the REFIT-Renewable Energy Feed In Tariff
which has promoted and increased the amount of electricity generated from renewable sources simply because when a
fixed tariff is provided, the investor is guaranteed to have a stable tariff for a reasonable period of time like 20
years”- ERA official.
vii. Global Energy Transfer for Feed-in-Tariff (GET FiT); Working with the GoU and KfW, ERA developed the
GET FiT programme in 2012 in order to increase Uganda’s energy production to mitigate possible power
supply shortages before the large hydro plants get online. The main purpose of the GET FiT Programme
is to fast-track development of renewable energy generation projects of 1 MW – 20 MW promoted by
private developers with a total installed capacity of about 170 MW/ 830 GWh per annum17.
3.2 Supportive Institutional framework
a. Public Institutions
There are a number of public institutions that support the renewable energy sub-sector in Uganda. The institutions
and their roles are presented in Table 5.
Table 5: Public Institutions in Uganda’s Energy Sector
MDAs Roles and Responsibilities
Ministry of Energy and
Mineral Development
The Ministry is responsible for energy policy formulation and oversees the
operations of the electric power sub-sector.
The Ministry of Water
and Environment
Directorate of Water Development is responsible for managing the water
resources. It is the agency that awards surface-water permits (abstraction permits)
to project developers.
Ministry of Finance,
Planning and
Economic
Development
Responsible for mobilisation of resources and financing government energy
projects.

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Electricity Regulatory
Authority
ERA is a corporate body established in April 2000 by virtue of the Electricity Act,
1999 (Cap. 145), as an independent sector regulator. Its main function is to regulate
the generation, transmission, distribution, sale, export and import of electricity.
ERA reviews and approves electricity tariffs.
Rural Electrification
Board (REB)
This was established in 1998 to manage the Rural Electrification Fund. The
secretariat of the REB is the Rural Electrification Agency. The REB, as the
governing body of Rural Electrification Authority (REA), provides subsides to
support rural electrification projects.
Rural Electrification
Authority (REA)
Established in 2003 with the mandate of managing rural electrification projects. Its
key role is to increase the electricity grid coverage. REA provides policy advice to
the REB, operationalisation of Uganda’s Rural Electrification Strategy and Plan and
administering the Rural Electrification Fund (REF).
Electricity Disputes
Tribunal
Part XIII of the Electricity Act, 1999, provides for the Electricity Disputes
Tribunal. This is a body concerned with the arbitration of cases in the electricity
sector. Any stakeholder, who may not be satisfied with ERA’s decisions, can appeal
to the tribunal.
Generation,
Transmission,
Distribution
companies
Uganda Electricity Generation Company Limited (UEGCL) – Owns two
generating power stations at Jinja – Nalubale and Kiira power stations. In
November 2002, the UEGCL was privatised through a long-term concession of 20
years with ESKOM Enterprises (U) Ltd.
Uganda Electricity Transmission Company Limited (UETCL) - UETCL is publicly
owned, but operates as an independent and profit-making business unit. The key
roles are: owner, investor and operator of transmission; power lines above 3kV in
the country; system operator; single buyer for grid-connected generation, which is
sold on to distributors; exporter to neighboring countries; and power-expansion
planner.
Uganda Electricity Distribution Company Limited (UEDCL) - UEDCL owns the
distribution infrastructure operating at 33kV and below. It is responsible for the
retail of electricity including metering and billing of consumers. UEDCL granted a
concession (2005–2024) to Umeme to manage and operate the national distribution
grid.
Concessionaires ESKOM, UMEME, Ferdsult, WENRECO, and URECL
Uganda Energy Credit
Capitalisation
Company (UECCC)
Government of Uganda owned company to promote private sector-led renewable
energy infrastructure development; to provide transaction advisory services; to
introduce innovative financing modalities.
Uganda National
Bureau of Standards
(UNBS)
Mandated to develop and promote standardisation, quality assurance, laboratory
testing and metrology.
Local Governments
(LGs)
These promote use of efficient energy technologies through sensitisation.
However, there is no replica MEMD institution at LG levels; energy issues are
handled by ENR department.
Other Agencies
National Environment Management Authority (NEMA)- awards certificates of
environmental clearance, following review and approval of Environmental Audits
(EAs), Environmental Impact Assessment (EIA) Reports and Resettlement Action
Plans (RAPs).
Uganda Revenue Authority (URA) - is responsible for overseeing taxation related
to the energy sector, as well as private investment in the energy sector.
Uganda Investment Authority (UIA) -autonomous regulatory body to promote and
facilitate investments in Uganda. The Authority also facilitates investment in
Uganda’s energy sector.

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The Public Procurement and Disposal of Assets Authority (PPDA)- It is
responsible for drawing guidelines for procurement and disposal of government
assets. Responsible for guiding the contractual process in Uganda’s energy sector.
Uganda National Bureau of Standards (UNBS) – UNBS is responsible for
development and monitoring standards for renewable-energy technologies, in
addition to biofuels technology.
Source: Whitley Shelagh and Tumushabe Godber (2014).
b. Development partners
Uganda has a large community of international development partners in the energy sector. These are coordinated
through the Energy and Mineral Development Partners Group (EMDPG) which Norway is leading. DPs
represented in the EMDPG are: KfW, GIZ, USAID, DFID, EIB, EU-Commission, France, Ireland, IWF, AfDB,
JICA, Norway and World Bank. In addition, other DPS supporting the Ugandan energy sector include: NORAD,
IAEA, USTDA, IDB, UNDP, UNIDO, NDF and SIDA.
c. Nongovernmental Organisations (NGOs)
There are several NGOs working in the field of renewable energy at national level and Albertine region. Some of
these include: WWF-UCO, Environmental Alert, IRDI, VEDCO, Rwenzori Eco Tourism and Disaster
Management Organisation, KCSON, RICE-WN, KIMMA Foods, Sustainable Environment Awake (SEA),
Conservation and Development Agency (CODEA), KAWODA, Good Hope Foundation, KIKA, Katara Women
Poverty Alleviation. Most of them are promoting and providing various clean energy options which include: Solar
PVs for lighting, phone charging and to a lesser extent, cooking and fridges; firewood liners that are specially built
to save on the amounts of fuel wood used and improved cook stoves. Others are involved in policy advocacy on
increasing access to renewable energy especially in the areas of standards, taxation and tariffs. For example, WWF-
UCO together with her partners have engaged LGs to waive taxes/ levies on suppliers of RETs, especially solar and
cook stoves.
d. Private sector actors
There are a number of private actors in the renewable energy sectors, some of them include: Eskom Limited,
UMEME, Financial Trust Bank, MCoper, Centenary Bank, CEPA, Postbank, Solar Now, UNACC, UNREEEA,
UREA, Ferdsult, URECL, WENRECO, FINCA, MTN Solar Pay, and Barefoot. Majority of them are renewable
energy providers and financiers. The term ‘providers’ spans a very wide range of functions in the supply chain:
design, manufacturing, power generation, distribution and resale (importers, wholesalers, retailers), installation, and
service repair. Financing involves provision of credit and soft loans to both providers and end-users of RETs.
3.3 Financially viable electricity sector
Over the past two decades, Uganda pursued energy sector reforms initiatives aimed at improving utility performance
issues and according to a recent paper on the financial viability of utilities in 39 Sub-Saharan African countries, it
was found that Uganda and Seychelles had a financially viable electricity sector (World Bank, 2017).
3.4 Funding opportunities
Variety of funding opportunities exist from domestic and international sources for investments in clean and
renewable energy access in Uganda, some of them are presented in Table 6 and 7. Details are contained in Annex
2 and 3.
Table 6: Domestic funding opportunities for Renewable Energy
Agency Amounts
a MEMD Budget allocation: UGX 1,826.50 Billion (2017/18)
b
Uganda Energy
Credit Capitalisation
Company (UECCC)
Solar Loan Product - US $ 1.5 Million
Solar Financing framework for Tier 4 financial institutions - UGX 1 billion
Solar Working Capital Facility - US $ 8.5 Million
Connection Loan Programme - UGX 1 billion

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20
Agency Amounts
The Biomass Refinance Facility - UGX 210 million
ORIO Mini-Hydro Power Projects UGX110 Bn
Technical Assistance - Euro 1.5 million
c Development Banks
 UDB – funding for mini-hydro & solar energy plants and solar powered systems.
 AfDB - Energy portfolio accounts about 14 percent of the entire portfolio (USD
1.1 billion).
d
Development
Partners
World Bank - US$ 256.9 million (committed) 18
The projects include:
 Uganda Rural Electrification - US$ 13.7 million
 Uganda Grid Expansion and Reinforcement Project (GERP) - US$ 100 million
 Uganda Energy for Rural Transformation III - US$ 135.0 million
 UG GEF Energy for Rural Transformation III - US$ 8.2 million
 GPOBA: Uganda Energy for Rural Transformation - US$ 0.03 million
European Union - EU-ACP Energy Facility (EUR 10.6M)
SIDA Uganda programme (2016-2020) USD 4.6 million
WWF – USD 2-3 million annually for REs
United Nations
Development Fund
(UNCDF)
Clean Start Programme (2012 – 2018)- $1.8M (grant funding) and $3 M (leverage)
e
Global Energy
Transfer Feed in
Tariff (GETFiT)
Programme
GETFiT programme - EUR 93.6 million (committed)
f
Financial Institutions
and Private Sector
 Post Bank - provide credit to the public and private sector to acquire renewable
energy equipment.
 Centenary Bank; loaned over UGX 1.5 billion
 FINCA - Bright Life Finca; invested over 0.5 million and raised 0.5 million from
donors.
 M-Kopa - Invested over USD 30 million.
Source: Author’s calculations based on Document review and key informant interview.
Table 7: International funding opportunities for Renewable Energy
Agency Amounts
a. Acumen USD 7M – 10M (3 Years)
b.
DFID (private sector investment
and innovation in low cost, clean
energy technologies)
Africa Enterprise Challenge Fund - £49 M
EEP - £27.5 M
RBF - £40 M
DFID (Energy Africa campaign)
Transforming Energy Access - £65 M
Africa Clean Energy (ACE) - £65 M
Power Africa and Shell Foundation USD 36 M
c. UNCDF’s Clean Start - US$26 million
d. Bamboo Finance US$ 20 million (5 years)
e. Cross Boundary US$200 million (5 years)
f. Embark Energy $4.5 million
g. Energiya $750 million (5 years)
h. Fenix International $287 million
i. Gray Ghost Ventures USD $50 million (5-6 years)
18 Accessed from http://projects.worldbank.org/search?lang=en&searchTerm=&countrycode_exact=UG.

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Agency Amounts
j. Invested Development $20 million
k. Liberia Energy Network
Distribute over 200,000 "plug and play" solar LED lighting
and cell phone charging units
l. Mosaic US$125M (5 years)
m. Schneider Electric
venture capital to off-grid energy SMEs- USD 60-80
million (5 years)
n. Sunfunder US$ 120 million (5 years)
Source: Author’s calculations based on Document review.
These financing can be accessed through:
i. Public funding. Through the MEMD, REA, ERA, UECC, among others;
ii. Debt or equity. These may include; mezzanine finance, senior debt, project finance, venture capital and dedicated
funds. The majority of debt financing is being provided by international finance institutions (IFIs) and
development finance institutions (DFIs), including the International Finance Corporation (IFC);
iii. Grants - some organisations provide funding to private sector and NGOs to enable them reduce the risks of
investing in RETs, especially those targeting low income earners and in remote areas;
iv. Credit facilities - some financial institutions are providing credit to companies, agencies and users to invest in
RETs;
v. Climate finance. They can act as a catalyst for the financing of renewable energy projects in Uganda. Several
dedicated climate finance initiatives such as; Global Environment Facility (GEF), Climate Investment Funds
(GIF), and Green Climate Fund (GCF) have already been channeling climate finance to developing countries.
The GCF’s Private Sector Facility could be used to create a risk mitigation facility dedicated to supporting
renewable energy projects;

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3.5 Carbon financing
Renewable energy electricity projects (such as hydro etc) licensed by Electricity Regulatory Authority (ERA) are
eligible to generate carbon credits and in turn earn additional revenue through the Clean Development Mechanism
(CDM). To promote development of renewable energy, the revenue inflow to the subject project from the sale of
carbon credits does not affect the Feed in Tariffs downwards (ERA, 2014). Eight projects in Uganda are registered
under the CDM. These include: West Nile Electrification Project (WNEP); Uganda Municipal Waste Compost
Programme; Bujagali Hydropower Project; Anaerobic digestion and heat generation at Sugar Corporation of Uganda
Limited; Up Energy Improved Cook stove Programme Uganda; Accelerating Electrification through Grid
Extension and Off-Grid Electrification in Rural Areas of Uganda; Mpanga 18 MW Run-of-River Hydropower
Project; and Institutional Improved Cook Stoves for Schools and Institutions in Uganda.19
3.6 Potential of oil and gas revenues
Uganda made significant discoveries of oil and gas. Oil reserves stood at an estimated 6.5 billion barrels in 2015 (of
which 1.4 billion barrels were economically recoverable) (URA and MoFPED, 2015). However, the larger part of
revenue from these is not expected until 2020 when full-scale production commences. Nevertheless, Government
of Uganda has been getting some revenues from mainly capital gains tax (MoFPED, 2015). The Committee on
19 http://cdm.unfccc.int/Projects/projsearch.html; accessed on 25th April, 2018.
Box 3: Enablers for targeting finance towards renewable energy financing: Lessons from Bangladesh and Nepal.
Both Bangladesh and Nepal implemented a wide range of incentives that encouraged policymakers,
practitioners, investors and communities to develop renewable energy projects.
Some of the key lessons Uganda can emulate include:
a. Policy enablers: such as fiscal incentives. e.g. incentives were created to encourage renewable investments
such as reduction in import tariffs and lower taxes on renewable energy products.
b. Economic enablers for a range of energy access actors – investors, providers, support services and users.
e.g. access to concessional finance by commercial banks for on-lending to suppliers or microfinance
institutions. There is a regulatory requirement for Bangladesh commercial banks to invest a proportion of
their lending to ‘greener project’ which also offers a policy incentive.
Actors lower down the value chain such as microfinance institutions, NGOs and suppliers encouraged to
engage in the renewable energy market by the provision of low interest credit. Suppliers and manufacturers
of Bangladesh also see benefits of engaging in this market due to available tax holidays and exemptions on
local production and use of renewable products. End-users finally receive financial benefit in form of
grants and microfinance loans.
c. Regulatory push by central banks: The central banks use their regulatory roles to encourage private
sector investment. The green banking circular of Central Bank of Bangladesh, for example, mandates
commercial banks to allocate 5 per cent of their lending to green investments. Such regulatory push in
combination with financial incentives, such as low cost loans, encourages mainstream banks to explore
untested territories that rest outside their comfort zones.
d. Dedicated agencies to aggregate funds and projects: Dedicated ‘special purpose vehicles’ (SPVs) – or
agencies – are very useful as they have specific capacities and a mandate which enables them to draw down
resources from donors and governments and channel them to lots of small-scale projects and actors. This
model works well in case funders or investors are reluctant to channel funds to many small renewable
energy projects due to high transaction costs. In addition, the one-stop-shop role model of the special
purpose agency is not limited to finance, but also includes a variety of services aimed at helping to create
markets and delivery networks. These provide access to capital, quality assurance, after-sales services,
training and institutional support; thus offering a package of services that support and sustain the market
and environment for renewable energy projects.
Source: Rai, N, Best, S and Soanes, M (2016).

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Commissions, Statutory Authorities and State Enterprises (COSASE) of Parliament established that government
had so far received USD 709 million (UGX 2.6 trillion) as revenues from oil and gas related activities (Parliament
of Republic of Uganda, 2017). Oil and gas revenues can provide potential funding for RE projects, for instance,
some of these funds have been used to finance energy related projects, especially co-financing of Karuma and Isimba
hydro dams.
3.7 Investment in off-grid
Off-grid electrification takes two main forms - standalone home energy systems and mini-grids. Although mini-
grids have been used for electrifying rural villages for at least two decades, it is standalone systems that are now far
more common (PwC, 2016). The off-grid power systems include; stand-alone PV systems, back-up systems, dry cell
batteries and battery based systems. The size of systems varies from basic Pico-PV lighting systems to Solar Home
System (SHS) installations that can power devices such as; phone charging systems, televisions, fans and fridges.
Although relatively small in terms of overall quantity and though not easily included in national statistics, off-grid
power systems provide good opportunities for increasing access to energy. The ongoing affordability challenge
means that off-grid systems are the way to go. Households on as little as USD 1–3 per day income can often afford
a solar lantern, while those on USD 3–5 a day can pay for a small solar home system that can run three to four
lights, charge a phone, or run a radio (Rai, N, Best, S and Soanes, M, 2016).
“Off-grid solutions will be the best option for many rural and remote areas in order to meet the 2030 targets”- WWF, 2015.
The growth of off-grid electrification has been led by public initiatives such as the Rural Electrification and
Renewable Energy Project in Bangladesh or commercially-driven, with financing funded either by 100 percent
upfront cash payment by customers or through pay-as-you-go (PAYG) schemes or long-term leases (PWC, 2016).
In Uganda, part of the success of standalone home systems has been due to the strongly customer-centric focus of
PAYG SHS companies. There is spread of customer-financing business models such as pay-as-you-go (PAYG) for
solar home systems in Uganda with companies such as M-Kopa and Solar now which are at the forefront, using
payment systems such as Mobile Money.
Box 4: Standalone electrification for rural housing in the Eastern Cape, South Africa.
Off-grid solar home systems are being installed in 1700 rural households in the Eastern Cape
region of South Africa. They comprise a 90W rooftop solar PV panel and storage battery to deliver
enough energy to power six indoor LED lights for up to four hours per day and two external
LED security lights for 12 hours. They are also capable of powering a DC 32-inch TV set for five
hours as well as providing mobile phone charging for five hours via two 7A ‘cigarette lighter- type’
sockets. The systems can be expanded, with additional solar panels and batteries, to cater for a
DC refrigerator, washing machine and a sewing machine. Payment for the solar electrification
project comes from a government-funded electricity grant previously earmarked to assist home
owners in paying for Eskom generated power. The project was commissioned by the Mbhashe
municipality at Dutywa in conjunction with South Africa’s Department of Energy (DoE).
Source: PWC (2016).
Box 5: Ghana Solar-powered mini-grids bring security and new economic opportunities.
Ghana provides electricity for 83% of its population, the second highest rate in Sub-Saharan Africa,
but connecting isolated areas to the grid has proved very difficult. The solution: investing in solar-
powered mini-grids like this one, built with support from IDA, the World Bank Group’s fund for
the poorest. In the towns around the Volta River, 10,000 Ghanaians now enjoy uninterrupted
power, which enhances security and brings new economic opportunities.
Source: World Bank (2018).

1. Unlocking Financing and Investments for Clean and Renewable Energy Access in Uganda: A Case of the Albertine Region, July 2018

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1. Unlocking Financing and Investments for Clean and Renewable Energy Access in Uganda: A Case of the Albertine Region, July 2018